Audit Representation: When to Hire a Tax Attorney vs. CPA

How to decide between a tax attorney and a CPA for audit representation

Choosing the right representative can change the course of an audit. Below I explain the practical differences, when each specialist is most appropriate, what they can and cannot do, and how to pick the right professional for your situation. In my practice helping taxpayers for 15 years, the right choice often comes down to three things: the legal risk, the complexity of accounting issues, and whether privileged communications are needed.

Key differences at a glance

• Scope: CPAs are trained in accounting, tax return preparation, and tax controversy work. Tax attorneys are trained in tax law, litigation, and criminal defense when tax crimes are alleged.
• Privilege: Communications with tax attorneys may be protected by attorney‑client privilege in many situations; communications with CPAs typically are not fully privileged (state rules vary). For criminal exposure, privilege can be decisive.
• Typical cases: Use a CPA for correspondence and office audits focused on documentation and math/record issues. Use a tax attorney for potential criminal investigations, large civil penalties, or when you expect to litigate in Tax Court.
• Authorization: Both can represent you before the IRS when authorized, usually via IRS Form 2848 (Power of Attorney) or by meeting IRS documentation rules—your representative can explain and file these for you (see IRS guidance) (IRS).

(For background on audit types and what to expect during each, see our guide on “Navigating the IRS Audit Process: What to Expect.” https://finhelp.io/glossary/navigating-the-irs-audit-process-what-to-expect/)

When to hire a CPA

Hire a CPA when the audit centers on bookkeeping, substantiation of deductions, income reporting, or routine adjustments. Typical situations where a CPA is the better first call:

• The IRS requests receipts, bank records, or explanations for specific line items (correspondence or office audits).
• Small- to mid-size adjustments are likely and the main dispute is about documentation or accounting methods.
• You need corrected returns, amended filings, or negotiation of a reasonable proposed assessment.
• You want help compiling a document packet or preparing financial statements to respond to the examiner.

CPAs can explain depreciation schedules, cost-of-goods-sold calculations, or how to reconstruct income. They usually handle most routine audits effectively and can negotiate reductions or installment agreements where appropriate.

Helpful internal resource: our step-by-step checklist on “How to Gather Records for an IRS Audit” is a practical complement to CPA work: https://finhelp.io/glossary/how-to-gather-records-for-an-irs-audit-a-step-by-step-guide/

When to hire a tax attorney

Hire a tax attorney when legal risk is high or when you need litigation or criminal-defense expertise. Consider a tax attorney if any of these apply:

• The IRS refers the case to the Criminal Investigation division or uses language suggesting fraud, evasion, or willful conduct.
• You face large tax liabilities combined with substantial penalties (civil fraud, accuracy‑related penalties) and a risk of prosecution.
• You expect the matter to move to Tax Court or federal court and will likely need legal briefing and argument.
• You require attorney‑client privilege for confidential strategy discussions.

A tax attorney helps frame legal defenses, negotiate Offers in Compromise that rely on legal arguments, and represent you in litigation. Attorneys are also trained to spot potential collateral legal issues—e.g., state tax consequences, business entity exposure, or related civil suits.

For legal practice rules governing representation before the IRS, see Treasury Circular 230 and related IRS pages (IRS: Circular 230) (U.S. Department of the Treasury).

Mixed teams: when to use both

Many cases benefit from a team approach. For instance:

• A CPA prepares the audit packet, reconstructs records, and calculates figures while a tax attorney oversees legal strategy and privilege-sensitive communications.
• If a routine audit escalates (examiner flags suspicious items), bring an attorney in early to preserve privilege and manage potential criminal exposure.

In my experience, bringing an attorney early—even for a short consult—can prevent costly missteps if the audit widens. It’s often cheaper to buy a brief attorney review than to convert a purely CPA-handled case into full defense once criminal attention begins.

What each professional will do during the audit

CPA responsibilities may include:

• Reviewing the IRS notice and identifying requested items.
• Gathering and organizing receipts, bank statements, and ledgers.
• Preparing reconciliations, computations, and amended returns.
• Negotiating adjustments, penalties, and payment plans with examiners.

Tax attorney responsibilities may include:

• Advising on legal exposure and potential criminal risk.
• Asserting attorney‑client privilege where appropriate and counseling on disclosure strategy.
• Negotiating with Appeals or representing you in Tax Court.
• Handling subpoenas, summons resistance, and related litigation.

Both professionals commonly attend interviews with the examiner and present documents on the taxpayer’s behalf after proper authorization.

Privilege explained (and why it matters)

Attorney‑client privilege protects confidential legal advice between you and an attorney, which matters when you discuss admissions or strategy that could be incriminating. Privilege generally does not protect communications with CPAs, although some states recognize limited privileges for tax advice given by licensed attorneys or for communications prepared for litigation.

Note: privilege is not absolute. It does not cover communications intended to facilitate ongoing or future criminal activity, and privilege can be waived by disclosure to third parties. For a practice-focused discussion of privileged communications and representation rules, review Circular 230 and consult a tax attorney early when privilege is a concern.

Practical checklist to choose a representative

1. Read the IRS notice carefully. Is it a correspondence audit (letter) or a field/office audit? The letter will often indicate the issues and urgency. (See our article “How to Prepare for an IRS Audit” for types and timelines.) https://finhelp.io/glossary/how-to-prepare-for-an-irs-audit/
2. If the notice uses words like “fraud,” “criminal investigation,” or mentions the IRS Criminal Investigation Division, hire a tax attorney immediately.
3. If the request is for records to substantiate deductions, start with a CPA unless other red flags exist.
4. Ask candidates about specific audit experience: ask for examples of similar issues they resolved and the IRS offices they worked with.
5. Ask about billing: hourly vs. fixed-fee vs. contingency for collection/offer negotiations.
6. Get a written engagement letter defining scope: who will appear, what forms they will file (Form 2848 or 8821), and what costs are included.

Fees and engagement models

Costs vary widely by geography, complexity, and professional experience. Typical models include hourly billing, flat fees for correspondence audits, and fixed pricing for a defined set of services. Tax attorneys generally charge higher hourly rates than CPAs because of specialized legal training and potential litigation work. Always get an engagement letter and an estimate of total costs to avoid surprises.

Common mistakes taxpayers make

• Waiting too long to get professional help—early engagement gives you control over records and strategy.
• Choosing by price alone rather than audit experience and local IRS office knowledge.
• Failing to get scope in writing—many disputes center on what the representative promised to do.
• Assuming privilege exists with a CPA—privilege issues are often revealed too late.

FAQs (short answers)

Q: Can a CPA represent me at an IRS audit? A: Yes. CPAs, enrolled agents, and attorneys can represent taxpayers before the IRS when properly authorized.

Q: Does hiring an attorney stop an audit? A: No. Hiring a lawyer does not halt an audit, but it changes how communications occur and can shift the focus to legal strategy. It may slow certain steps while privilege and defense are evaluated.

Q: Will communications be privileged if my CPA talks to the attorney? A: Not automatically. Privilege generally covers direct communications with an attorney. If you want privilege for joint work, discuss strategy with your attorney to determine what can be privileged and what cannot.

Final professional guidance

If the audit appears routine and documentation can resolve the issue, a CPA is usually the efficient and cost-effective choice. If the audit threatens criminal exposure, large civil penalties, or possible litigation, hire a tax attorney immediately and consider a combined CPA/attorney team. In my practice, a short attorney consult early has frequently prevented escalation and preserved better negotiation outcomes.

Sources and further reading

• IRS — general information on audits and taxpayer representation: https://www.irs.gov/
• U.S. Department of the Treasury — Circular 230 (practice before the IRS and power of attorney rules): https://www.irs.gov/tax-professionals/circular-230-practice-before-the-irs-and-power-of-attorney
• FinHelp guides: “Navigating the IRS Audit Process: What to Expect” and “How to Gather Records for an IRS Audit” (internal links above)

Professional disclaimer: This article is educational and does not constitute legal or financial advice. Facts and laws change; consult a qualified CPA or tax attorney for advice tailored to your circumstances.